Namibia: NaCC sets conditions for Telecom/leo merger

Telecoms

The last major hurdle for Telecom Namibia to acquire the controlling shares in the country’s second mobile operator leo has been passed.

The Namibian Competition Commission on Friday approved the proposed merger between Telecom Namibia and Powercom which trades as leo – but the commission has placed a set of conditions in its approval.

The proposed merger will only be cleared to proceed if the merging parties put in place a separate and independent shareholding structure for Telecom Namibia and that of MTC. According to the competition commission, this separation of the holding structure must be effected within a period of two years from the date of this notice of determination. Another condition that must be met is that the incumbent CEO of the Namibia Post and Telecom Holdings (NPTH) which is the parent company of Telecom, MTC and Namibia Post Limited should step down from his position with immediate effect. Frans Ndoroma who is also the Telecom Namibia Managing Director is serving in that position at the moment.

The Head of Legal Services and Company Secretary of Telecom Namibia Patience Kangueehi-Kanalelo should also resign from her position as NPTH company secretary.

“No person who is a director of Telecom Namibia or an employee of Telecom Namibia may serve as a director of either NPTH or MTC and likewise, no person who is a director of MTC or an employee of MTC may serve as a director of either NPTH or Telecom Namibia,” read the statement by Namibian Competition Commission CEO Mihe Gaomab II.

The leo/Telecom merger has raised a number of competition concerns with commentators in the communication industry arguing that Telecom’s plan to buy leo has the potential of creating a monopoly as all land and mobile telecommunication service providers in the country will then belong to NPTH.

Gaomab added that the approval conditions were in the interest of preventing any collusive or co-ordinated behaviour that would undermine the free and spirited competition for all entities in that sector, including Telecom and MTC. He added: “The conditions are therefore imposed to mitigate the negative impact that the merger may have on competition in the relevant market/mobile telecommunication market.”

As Namibia’s second mobile operator leo, formerly Cell One, launched in 2007. In September 2009 Cell One was rebranded to leo when Telenor and other shareholders were bought out by Telecel Globe.

Up to 2010 leo had invested millions of dollars through infrastructure and staff employment. It currently employs 151 permanent and 20 temporary staff members at head office and in 11 retail outlets. The network is equipped with EDGE/3G/ and HSDPA functionalities and currently covers 75% of Namibia.